In a sunlit Paris boutique, a coveted Hermès Birkin quietly changes hands — discreetly wrapped, yet loudly symbolic of a luxury handbag market that has not just endured recent turmoil, but in many cases thrived. From pandemic-induced slumps to roaring recoveries, high-end handbags have proven their resilience. Now, as the industry navigates cooling growth and shifting consumer tides, luxury executives and fashion enthusiasts alike are asking: What’s next for the world’s most sought-after accessories?
The past few years have been a rollercoaster for luxury handbags. After the initial shock of 2020, demand rebounded with a vengeance. Post-pandemic euphoria and high inflation saw luxury brands aggressively raising prices — according to Edited data, luxury prices jumped by as much as 25% between 2019 and 2022 . Handbags, the cash cows of many luxury houses, led the charge with price hike after price hike. Chanel’s iconic 2.55 flap bag, often seen as a barometer for the industry, now costs nearly three times what it did before the pandemic . (A decade ago, a Medium Classic Flap was around £3,000; today it tops £8,500 .) This luxury price boom has tested the limits of consumer tolerance — and yet, in many cases, only heightened the allure of owning an “It” bag.
By 2022 and 2023, signs of a market recalibration emerged. Some shoppers, especially aspirational buyers, began to balk at the ever-increasing price tags, contributing to a softening in growth. Global demand for personal luxury goods cooled to an 8% increase in 2023, a marked deceleration after three consecutive years of roughly 20% annual growth . Headwinds like lower consumer confidence (particularly in China) and those steep price increases were largely behind this shift . Yet, even amid a more cautious climate, the handbag market continued to expand. Analysts estimate the global luxury handbags market was about $34 billion in 2024, and it’s on track to reach roughly $60 billion by 2034, growing around 6% annually . In other words, the long-term forecast remains robust, buoyed by an expanding affluent class and the enduring status of luxury accessories.
Resilience has been the defining trait of this sector. When other categories faltered, handbags remained a port in the storm, with consumers viewing them as both fashion statements and investment pieces. A well-chosen Birkin or Classic Flap not only retains value but often appreciates, creating an asset class of its own in the resale market. Little wonder that many luxury houses doubled-down on their leather goods strategies through the pandemic and beyond — and now, as the dust settles, we see a landscape where heritage brands have extended their lead, new stars are rising, and even challenged players are charting turnaround plans.
In the pantheon of luxury handbags, Hermès stands apart, its aura of exclusivity only burnished by time. As other brands scrambled with markdowns or marketing gimmicks in lean times, Hermès coolly pressed forward, confident in the timeless appeal of its handbags and the strict scarcity it maintains. The results speak volumes. Hermès’ consolidated revenues hit €13.4 billion in 2023, up 16% year-on-year — a performance that outshone most rivals and defied the wider luxury slowdown. Even in the final quarter of 2023, often a challenging period, sales jumped 13% despite tough comparisons . The company notched double-digit growth across all regions, including a 13% rise in Asia and 17% in the Americas , showcasing truly global resilience. Hermes has also reported revenue growth of 17.6% for Q4 2024 (Financial Times).
What’s driving this stellar run? Quite simply, insatiable demand for Hermès handbags. The Birkin may be the stuff of legend — infamously hard to obtain and carried by everyone from royals to rock stars — but it’s not the only hero. Hermès has masterfully cultivated new classics like the Kelly, Constance, and more recently the Della Cavalleria and Maximors, which all carry that same aura of craftsmanship and exclusivity. In 2023, Hermès’ core Leather Goods and Saddlery division grew a healthy 12%, fueled by consumer appetite for both classic and new bag silhouettes . As one industry observer noted, the enduring popularity of Hermès handbags has allowed the house to stay remarkably resilient while other luxury firms struggled .
Hermès executive chairman Axel Dumas credits “the strong desirability of our collections” and the house’s singular approach for its outstanding year . Indeed, Hermès operates unlike any other: eschewing mass marketing, keeping supply deliberately below demand, and investing heavily in its artisans. The brand’s famously long waitlists might officially be “myth” according to the company, but the mystique remains — there’s always someone waiting (often for months or years) for that call from their boutique about a coveted bag. This aura of unattainability, combined with impeccable quality, has turned Hermès handbags into quasi-assets. In the resale market, a well-kept Birkin can often fetch more than its retail price, and some limited editions appreciate dramatically over time. Little surprise then that in a challenging year for luxury, Hermès not only held its ground but extended its lead.
As the world’s largest luxury conglomerate, LVMH offers a broad barometer for the market’s health. Home to Louis Vuitton, Dior, Fendi, Celine, and more, LVMH’s portfolio spans fashion, jewelry, wines and spirits. But it’s the Fashion & Leather Goods division — anchored by handbags and accessories — that remains the group’s engine of growth. In 2023, LVMH reported a record €86.2 billion in revenue (about $93.7 billion), up 9% from the prior year . Profits hit new highs as well, and notably, the Fashion & Leather Goods arm alone contributed €42.2 billion in sales (a 9% YoY increase) . To put that in perspective: Louis Vuitton, LVMH’s crown jewel, surpassed €22 billion in annual sales, making it the largest luxury brand in the world – even bigger than powerhouse Chanel.
This growth hasn’t been without challenges. Mid-2023 brought whispers of a luxury slowdown; LVMH’s Fashion & Leather Goods saw softer sales in Q2 and Q3 as inflation and a dip in U.S. and Chinese demand took a toll . But by the fourth quarter, the division roared back with €11.3 billion in Q4 revenue, marking the strongest quarter of the year . The turnaround underscored the power of diversification and brand equity within LVMH’s stable. When one brand or region cools, another often heats up.
Louis Vuitton remains the group’s unstoppable force – 2023 saw the brand set new records, buoyed by creative milestones like Pharrell Williams’ debut menswear show that “sparked enthusiasm worldwide” . Meanwhile, Christian Dior continued its hot streak, and brands like Celine and Loewe gained market share with buzzworthy collections. Indeed, even as the luxury market grew more volatile, LVMH’s strategy of constant innovation mixed with heritage kept shoppers spending. Whether it was a new Capucines handbag from Vuitton or a classic Baguette revival at Fendi, the group demonstrated that a pipeline of coveted products can overcome macro headwinds.
Looking ahead, LVMH is leveraging its scale to further cement its dominance. The company has been deepening control within the Arnault family (placing two of Arnault’s children in key leadership roles) , signaling long-term stability and vision. Investments in sustainable materials, store experiences, and digital engagement (like Louis Vuitton’s popular mobile game and NFTs) are aimed at the next generation of consumers. If 2024 proved anything, it’s that mega-brands like those under LVMH can not only weather a slowdown but even set the pace of the recovery. With an empire stretching from Paris to Shanghai, LVMH’s handbags will undoubtedly continue to shape the luxury landscape.
Few brands encapsulate the mystique of luxury quite like Chanel. In 2023, the privately-held maison offered a masterclass in riding consumer desire to new heights. Chanel’s revenues surged 16% (constant currency) to $19.7 billion, marking an all-time high . This double-digit growth came even as many rivals struggled with weaker demand, especially in the latter part of the year . In fact, Chanel’s sales were up a remarkable 14% in Q4 2023, a quarter when other brands began feeling the pinch of a market cooldown . The performance solidified Chanel’s position as the world’s second-largest luxury brand behind Louis Vuitton .
How did Chanel defy gravity? By doubling down on exclusivity, heritage, and customer experience. Under the leadership of CEO Leena Nair (who joined in 2022 from Unilever) and CFO Philippe Blondiaux, Chanel has unabashedly positioned itself at the very top of luxury. The house has been relentlessly raising prices on its handbags to preserve exclusivity – so much so that by early 2023 some styles were nearly three times their pre-2020 prices . A Classic Medium Flap bag now retails for around $10,800 after the latest hikes . These pricing moves, while discouraging to some aspirational buyers, have only intensified the brand’s cachet among high-net-worth clients and collectors. In tandem, Chanel has poured investment into its boutiques and VIP services, aiming to provide what Nair calls “the ultimate luxury experience” for clients .
The strategy is clearly paying off. “Over the past decade, Chanel has more than doubled its revenue and headcount, an extraordinary trajectory for a brand that doesn’t play the volume game . Highlights included extravagant events like the Métiers d’Art show in Dakar and new product initiatives (such as ultra-high-end jewellery presentations and the launch of a $165 refillable lipstick) – all aimed at reinforcing Chanel’s luxury leadership in not just fashion, but lifestyle. Matthieu Blazy has recently joined Chanel and will deliver his first collection for the brand in October 2025.
Chanel’s formula of engineered rarity extends beyond pricing. The brand tightly controls distribution (no e-commerce for its core fashion and handbags, only beauty is sold online) and even purchase quantity (customers are limited in how many classic bags they can buy per year, to prevent resellers from hoarding stock). This has made Chanel bags all the more elusive. The flip side of sky-high prices and limits? Secondary markets have boomed with Chanel offerings, where prices for mint-condition classics often match or exceed retail. It’s arguable that Chanel has embraced a mentality more akin to art – positioning its creations as investments and pieces of cultural heritage. And indeed, many clients treat them as such. As long as this aura holds, Chanel’s bold strategy of less is more (or rather, charging more for less) seems set to continue driving growth and profits.
For much of the last decade, Gucci was the flamboyant growth engine of the Kering group, capturing the zeitgeist with maximalist designs and a pop-culture following. But by 2022-2023, the venerable Italian house hit a crossroads. Under the weight of changing consumer tastes and internal transitions, Gucci’s growth stalled, making it an outlier in an otherwise buoyant luxury market. In 2023, parent company Kering saw its revenue actually dip 2% – a decline largely attributed to Gucci’s underperformance, as other Kering brands like Saint Laurent and Bottega Veneta could not fully offset the slump. The real trough came in 2024: in the third quarter, Gucci’s sales plummeted 25% year-on-year , dragging Kering’s total sales down 16% and prompting a third profit warning in a row for the group . It was a dramatic fall from grace for a label that just a few years prior had been posting double-digit gains like clockwork.
What went wrong? Insiders point to a mix of factors: Gucci’s all-out maximalism under former creative director Alessandro Michele had started to lose steam, especially in Asia where tastes were shifting to quieter luxury. The brand’s core audience, heavily reliant on Chinese and younger American consumers, pulled back spending amid economic uncertainties. And while competitors like Dior and Louis Vuitton refreshed their offerings and buzz, Gucci navigated the tricky period of a creative transition – Michele’s departure in late 2022 left a gap until new creative director Sabato De Sarno’s debut collection in September 2023, only to leave Gucci at the end of 2024. In essence, Gucci lost some cultural momentum just as the market grew more challenging.
Kering’s leadership is acutely aware that Gucci’s turnaround is critical to its fortunes. CEO François-Henri Pinault described 2024 as a time of “far-reaching transformation… at Gucci in particular, at a time when the whole luxury sector faces unfavourable conditions” . In other words, Gucci is trying to fix the plane while flying through turbulence. The good news: early signs of a rebound are appearing aas the Spring/Summer 2024 collection hinted at a return to Gucci’s heritage glamour but with a modern, pared-back twist – a gamble to re-engage lapsed aficionados and new customers who crave timelessness over novelty. The brand has also been fine-tuning its strategy: pulling back on the ubiquity that diluted its exclusivity, refocusing on leather goods craftsmanship, and re-energizing iconic lines (Jackie, Bamboo, Dionysus) with fresh storytelling.
Financially, Gucci’s pain has forced Kering to adjust expectations. The conglomerate warned that 2024 operating income could fall by nearly 50% from 2023’s level , reflecting the depth of the challenge. Yet, there’s cautious optimism that Gucci has hit bottom and can climb back. The luxury market’s core fundamentals – brand equity and creativity – remain intact at Gucci, and the buzz around its new direction is growing. The house still has immense assets: an interlocking-G logo with global recognition, a history of craftsmanship, and the backing of a now-streamlined Kering eager to see a turnaround. If Gucci can successfully pivot to meet the moment (perhaps dialing up a bit more understated elegance while preserving its eclectic soul), it stands to regain its position as a trendsetter. For 2025 and beyond, all eyes will be on how this storied brand reinvents itself to recapture the hearts of luxury’s new generation.
Not all of luxury’s recent success stories come from the very top of the market. Prada Group, the Italian luxury house, has mounted an impressive comeback, in part by tapping into youth-driven trends and the power of a sister brand, Miu Miu. In 2023, Prada Group’s sales climbed 17% to €4.7 billion, bucking the narrative of a market slowdown . This growth outpaced many larger rivals and was fueled by an unexpected star: Miu Miu, which has transformed from a quirky secondary line into a red-hot brand in its own right. Miu Miu’s retail sales skyrocketed 58% in 2023, including an astounding 82% jump in the fourth quarter . By contrast, the flagship Prada brand – no slouch itself – grew a solid 12% in retail sales . Miu Miu’s meteoric rise meant it outperformed its big sister and became one of the industry’s fastest-growing brands.
The Miu Miu phenomenon has been nothing short of a youthquake. Led by Miuccia Prada’s creative direction (she oversees Miu Miu even as Raf Simons co-helms Prada), Miu Miu struck gold by igniting trends that caught fire with Gen-Z and young Millennials. Think ballet flats, ultra-cropped mini-skirts, logo micro-mini bags, and even the tongue-in-cheek sight of underwear-as-outerwear (the viral “panties over tights” look) . These styles, splashed across social media and worn by influencers and celebrities, resonated particularly in the key Chinese market, where young luxury consumers eagerly seek the next cool thing . Miu Miu managed to capture that elusive mix of being playful, edgy, and covetable – and crucially, at a (slightly) more accessible price point than uber-luxury brands. The result: new, younger customers flooded in, giving Prada Group a fresh growth engine.
Prada’s own house brand has also been evolving. Long known for its intellect and avant-garde fashion, Prada struck a chord recently with products that balanced creativity and commercial appeal. The revival of the Prada Triangle logo on reissued 90s nylon bags, the success of its Cleo shoulder bag, and strong demand for its timeless Galleria totes all contributed to steady growth. Under the strategic guidance of CEO Andrea Guerra (appointed 2022) and marketing lead Lorenzo Bertelli (heir to the Prada empire), the company has focused on strengthening desirability and consistency across both brands . “The strength of our brands’ creativity has enabled us to capitalize and strengthen our desirability,” said Lorenzo Bertelli, who is poised to eventually take the reins from his parents Miuccia Prada and Patrizio Bertelli . This long-term vision, balancing heritage (Prada’s lineage) with reinvention (Miu Miu’s flair), has put Prada Group in an enviable position as an agile competitor in the handbag arena.
Prada’s recent growth has come despite broader market headwinds that challenged more aspirational luxury shoppers . In other words, Prada succeeded by leaning into design and fashion relevance, effectively convincing consumers that its products are worth the spend even as wallets tightened elsewhere. Moving forward, the Prada Group aims to keep its momentum by investing in stores, upping its digital game, and potentially expanding production to meet demand (without sacrificing the quality that underpins its luxury status). With Miu Miu now firmly on the map and Prada reinforcing its classic-meets-contemporary appeal, this duo is set to play a larger role in the global handbag race — and perhaps give the bigger French houses a run for their money in attracting the next generation of luxury clients.
Across the channel in Britain, Burberry has been writing its own comeback story — one that blends heritage revival with a dose of creative gamble. The storied brand, famous for its trench coats and plaid checks, entered 2023 under new creative direction (Daniel Lee, formerly of Bottega Veneta) and relatively new management (CEO Jonathan Akeroyd). Expectations were high that a refreshed Burberry would accelerate growth and climb the ranks of luxury leather goods. However, reality proved more complex. Burberry’s recent performance has been mixed, underscoring the challenges of rebooting a brand in a choppy market. In its fiscal 2024 (which for Burberry ended March 2024), the company saw a 4% drop in revenue to £2.97 billion , and profits fell by over a third . Even more telling, in the last quarter of 2023 (the holiday period), Burberry’s like-for-like sales fell 12%, dragged by a 19% slump in China – essentially wiping out the gains made earlier in the year.
Investors and management, however, received a glimmer of hope at the start of 2024. Burberry’s third quarter (Oct-Dec 2024) saw sales decline only 4%, much better than analysts’ expected -12% . The beat was driven largely by a strong holiday season in the United States, where Burberry actually grew, offsetting continued weakness in China . The stock surged on this news, as it hinted that the brand’s turnaround efforts might be finding their footing . Newly appointed CEO Joshua Schulman (who took over in mid-2024) noted that Burberry’s festive marketing — which spotlighted its trademark trench coats and cashmere scarves more than its newer fashion items — resonated strongly with customers . In fact, December saw an influx of new customers for the first time in years, a sign that returning to classic icons can rebuild brand desirability .
Daniel Lee’s creative reboot for Burberry has been closely watched. He immediately made waves by reintroducing a revamped Prorsum knight logo and splashing bold colors and tactile fabrics onto accessories. His first full collections featured distinctly British touches (like shearling and tartan designs) but also some eccentric pieces. The critical reception was mixed, and sales of some new fashion-forward items were slow, prompting concerns that Lee’s vision hadn’t yet clicked with buyers. This led Burberry to course-correct by emphasizing what it does best: heritage. Iconic check patterns, trench coat styling, and familiar handbag shapes have been brought back to center stage in merchandising. The new “Knight” bag, one of Lee’s creations, initially retailing around £2,500, helped lift Burberry’s average handbag price to ~£1,700 from £900 pre-Lee . While this move aims to push Burberry upmarket, some analysts warn it may have been ill-timed — essentially asking consumers to pay Louis Vuitton prices for a brand that’s still rekindling its luxury fire .
All told, Burberry’s handbag business is in rebuild mode. The company is banking on its British identity and Lee’s design talent to carve a distinct space in the luxury landscape, somewhere between the ultra-high-end French houses and the accessible luxury tier. The runway to success might be longer than initially hoped. But there are positive signs: Burberry’s renewed focus on quality and its core products has won praise, and the brand still enjoys strong recognition globally. With luxury growth likely to pick up in China again and the U.S. showing it can be a growth driver, Burberry could well see better days ahead. For 2025, the key will be balancing innovation with heritage – ensuring that new designs excite consumers without alienating those who fell in love with the Burberry of old. If Schulman and Lee get that formula right, the iconic check and knight could gallop back into prominence in the luxury handbag wars.
Underlying these brand narratives is a larger shift in who is buying luxury handbags and how they’re doing it. The baton of luxury consumption is steadily passing to younger generations, and their influence is reshaping the market’s future. Gen Z and Millennials are on track to dominate luxury spending in the coming years. By some estimates, Gen Z (born mid-1990s to early 2010s) will make up 25-30% of luxury purchases by 2030, with Millennials (born 1980s to mid-90s) not far behind . Already, their impact is evident: Gen Z’s spending on luxury grew 3× faster than other generations’ in recent years . In a 2023 survey of Vogue and GQ readers, 60% of Gen Z respondents reported a luxury purchase in the past 12 months – compared to just 18% of Baby Boomers . For these digitally native consumers, a Dior saddle bag or a Gucci Dionysus isn’t just a splurge; it can be an expression of identity, a lifestyle milestone, or even a savvy investment. “They view higher cost items and luxury pieces as investment pieces,” notes McKinsey’s Samantha Phillips, pointing out that young buyers have shown resilience in spending even during economic dips .
With this generational shift comes different values. Younger luxury shoppers are more likely to demand transparency, sustainability, and meaning from their brands. They’re drawn to brands that align with causes or have authentic stories, which partly explains the surge of interest in heritage-driven houses (the story behind a handcrafted Hermès or a vintage Chanel is irresistible). At the same time, they are creatures of the digital world. Social media – especially Instagram, TikTok, and Xiaohongshu (Little Red Book in China) – plays a huge role in discovery and desire. A single viral post of a celebrity carrying a Bottega Veneta pouch or a JW Pei vegan mini bag can spark global demand overnight. Luxury brands have taken note: marketing campaigns now routinely include influencer partnerships and digital storytelling that feel native to these platforms. Additionally, e-commerce and omni-channel shopping have become non-negotiable. Brands that once swore by the boutique-only experience are embracing online sales (even Chanel is reportedly exploring e-commerce beyond e-content for its handbags in the future) and enhancing their websites with personalization, virtual try-ons, and exclusive online drops.
Another tectonic change is the rise of the resale and vintage market. Today’s luxury consumers, especially the young, mix new purchases with second-hand finds. Platforms like The RealReal, Vestiaire Collective, and Rebag have made it easy to buy or sell pre-owned luxury bags. This trend not only reflects a sustainability ethos (buying pre-owned extends a product’s life), but also financial savvy – savvy shoppers know certain bags, like a limited Louis Vuitton collaboration piece or an Hermès Kelly in a rare color, might appreciate over time. Brands initially viewed the grey market warily, but many are now engaging with resale: some have launched their own certified vintage programs or partnerships. The secondary market also validates the investment narrative; case in point, a limited-edition Chanel or Hermès can sometimes resell for more than its original price, proving the point that these bags hold and grow value.
In terms of style, the handbag world is continually oscillating between logo-heavy maximalism and subtle “quiet luxury”. In the late 2010s, loud branding and statement bags (think Gucci Marmont with its giant GG or Dior’s monogram totes) were in vogue. But more recently, a shift to understated luxury has been noted – perhaps a post-pandemic preference for timeless over trendy. This has benefited brands like Hermès and Bottega Veneta (known for its logo-less woven leather), and even influenced giants like Gucci to tone things down. However, the cycle of fashion means the next “It” bag craze could be around the corner with a bold new look; the key for brands is to know their DNA and not stray too far even as trends evolve.
Finally, geography will shape the next chapter. Chinese consumers, who accounted for roughly one-third of global luxury spending pre-Covid, remain pivotal. Bain & Company forecasts that Chinese buyers will represent up to 40% of the global luxury market by 2030 , despite a recent slump during China’s economic slowdown. As China’s economy stabilizes and its travel rebounds (with tourists once again flying to fashion capitals to shop), their influence will likely surge anew. Similarly, other markets like India, Southeast Asia, and Africa are home to rising affluent classes and are increasingly on luxury brands’ radar for expansion. The Western markets, including the U.S. (currently the largest luxury market) and Europe, are mature but still growing, especially as tourism resumes. This global mix means the handbag boom is a worldwide phenomenon, with brands tailoring strategies city by city.
Despite economic clouds on the horizon, the luxury handbag sector stands on strong, well-moisturized leather footing. The evolution witnessed — from the meteoric post-lockdown surge to a more measured, sustainability-conscious growth — has in many ways left the industry healthier and wiser. Luxury executives now talk about “quality growth” and nurturing brand equity for the long term, rather than chasing short-term sales spikes. This could mean a slight retreat from incessant price hikes and a renewed attention to product innovation and customer loyalty. Indeed, some analysts suggest the era of unbridled price inflation might temper; brands may introduce more entry-level pieces or services to retain aspirational consumers priced out by the recent boom . Early signs of this recalibration are visible as well: a few houses have hinted at slowing down price increases, and instead adding value through craftsmanship, customization, or exclusive experiences (think made-to-order offerings or VIP client events).
The opportunities ahead are plentiful. Digital technology will continue to open new frontiers — imagine metaverse boutiques where one can snag a limited-run digital Dior Saddle bag for their avatar, or augmented reality apps that let you see how a Birkin looks with your outfit before you decide to purchase. While these may sound niche now, they represent the kind of experiential innovation luxury brands are exploring to engage the next generation. On the sustainability front, innovation in materials (mushroom leather, recycled ocean plastic textiles, etc.) and repair/resell services could create a more circular luxury ecosystem, aligning with the values of younger consumers without sacrificing quality.
Crucially, the aspirational dream that fuels the handbag market shows no sign of fading. If anything, in an age of mass-produced fast fashion, the allure of a meticulously hand-crafted bag, steeped in history and prestige, is even more special. As long as humans have an urge to signal taste, status, and individuality, there will be a market for these exceptional pieces. The forms may change — today’s mini bag trend could swing to oversized totes tomorrow — but the function of a luxury handbag as both utility and utterly symbolic indulgence remains constant.
In boardrooms from London to Milan, strategists are mapping out the next decade with both caution and optimism. They know that resilience is hard-earned; the last few years taught them to expect the unexpected. Yet, they also see a horizon filled with potential: new markets blossoming, new creatives pushing boundaries, and a consumer base that is broader and more engaged than ever. The luxury handbag market’s evolution is far from over. In fact, its next chapter is just beginning – one that promises to be as richly textured as the finest haute leather, and quite possibly, just as enduring.
